The Kiwi continued its upward trend against the dollar yesterday. The pair crossed the major psychological and technical level of 0.73 before ending the day slightly lower. The surge marked the sixth consecutive week of gains which started in November.
As shown, the pair reached the lowest yearly level in November when it touched the 0.6778 level. After that, it started making weekly gains fueled mostly by a stronger New Zealand economy and a weaker dollar.
For starters, New Zealand is the world’s 50th largest economy as measured by its GDP. Its main exports are in the agricultural industry with most of its income coming from concentrated milk. Its unemployment rate has fallen from 6.38% in 2012 to about 4.86% in 2018. It is estimated to remain steady below 5% up to 2022 and its GDP is growing at an average rate of 3.9%.
The current price action against the dollar can be viewed as a weakness of the dollar rather than the strength of the Kiwi. As shown below, the kiwi has fallen against its peers.
In the chart below, in the short term, the pair may see a 50% retracement to the 0.7171 level before starting to move higher which may potentially reach the 0.7391 level.
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